Demand grows for conceptual engineering services as M&As increase

September 10, 2015

ADIL, a UK-based independent energy consultancy with offices in Aberdeen and London, has recorded a 100% increase in demand for its Accelerated Conceptual Engineering (ACE) services as merger and acquisition (M&A) and divestment activities by UK Continental Shelf (UKCS) operators ramp up in the lower oil price environment.

The organization, which works with exploration and production companies around the world to progress projects to sanction and final delivery, has doubled the amount of early-stage evaluation work year on year and has delivered campaigns totaling in excess of £1.5 million since the start of the year.

ADIL has always provided its ACE services to companies seeking to optimize the development of a new discovery, but, increasingly, these services are being used by companies looking to acquire existing discoveries or to farm in to exploration prospects.

The consultancy is also seeing an increased need for its capabilities internationally, delivering due diligence and ACE services to clients in Trinidad, Mexico, Tunisia, Africa, and northwest Europe in the last eight months alone. This includes work with Sierra Oil & Gas, for whom ADIL carried out ACE due diligence and concept select services. This was ahead of the company bidding on, and being jointly awarded, blocks 2 and 7 in the Gulf of Mexico during the recent first tender of Mexico´s historic first licensing round.

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“The interest we are seeing across the industry for this type of service has never been higher, both from the large-scale operators and the new smaller, independent entrants,” said Lo Van Wachem, ADIL’s developments manager. “There are a large number of complex packages of assets on the market, particularly in the North Sea. This gives rise to significant opportunities for companies seeking to understand the economics, risks, and opportunities involved with the options for field and area developments.

“Historically the due diligence focus has been on the subsurface side; however, there is a lot of uncertainty and risk related to the subsea and surface facilities in the current climate, and identifying the areas to focus resources on is critical,” Wachem said. “There is a need to understand the facilities risks and upsides, the costs to improve and operate, and the costs involved in taking projects forward.”

This is the type of information that ADIL’s ACE process will generate to aid decision making. ACE combines ADIL’s experience with industry software to enable operators to make cost-effective evaluation of options during the appraisal and select phases of developments.

The process allows the client to explore optimum wells and facilities configurations and phasing for alternative development and export options, taking account of the forecast range of reserves outcomes. It integrates subsurface, drilling, process, commercial, and operations requirements to define all aspects of a development option through field life – delivering capital, operational, and abandonment expenditure costs for the options in line with the project maturity.

This enables a comparative economic evaluation to be undertaken and informed, auditable decisions to be made.

“There are significant opportunities out there, but, in order to get developments over the line, businesses need more accurate information within the concepts selection arena than ever before,” Wachem added. “By making full use of the data available at the selection stage, we are able to make a positive impact on an operator’s ability to accurately engineer, cost, and evaluate alternative development options and select the best option for taking projects forward.”